Across the country, many benefit brokers assisting consumers on the Affordable Care Act’s public health insurance exchanges were at a loss when it came to the scant number of insurer options available in their market for their clients.
For example, in Tennessee there were three insurers on the federally facilitated marketplace statewide in 2014 including Humana, Community Health Alliance and BlueCross BlueShield, the latter of which has about 65-to-70 percent market share according to their own reports released to benefit broker Matt Cowan in mid-March.
In fact, on the 36 federally facilitated marketplaces there were, on average, about four insurers (3.9 exactly) per market on a population-weighted basis, according to new data released by the National Bureau of Economic Research. With one of the main purposes of the ACA being increased insurer competition with the ultimate goal of driving costs down, there may be evidence that it’s not doing that yet.
The NBER working paper — called More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces — set out to determine, for sure, if more insurers would help the ACA in reaching that goal.
The study took the example of UnitedHealthcare, the nation’s largest medical carrier, refraining from participation in most public exchanges in 2014. The authors, including Jonathan Gruber one of the architects of Massachusetts’ health reform law and the ACA, simulated what premiums would have been if UHC had instead been introduced in all of the federal public exchange markets.
They found that premiums on the most popular level of coverage — the silver plan, which is the second lowest-tier — would have been 5.4 percent lower across the U.S. They also ran a simulation for health care coverage costs if all U.S.insurers had participated in their respective markets and found that premiums on the federally facilitated exchanges would have been 11.1 percent lower.
“We find that exchange premiums are responsive to competition,” the authors write. Gruber is with the department of economics at MIT in Cambridge, Mass. and the other two authors — Leemore Dafny and Christoper Ody — are with the Kellogg School of Management at Northwestern University in Evanston, Ill.
Back in Tennessee, Cowan — president of Cowan Benefit Services Inc. in Franklin — told EBA that he thinks consumers on BCBS will have an okay experience. For the 37 percent of the company’s exchange customers who selected a narrow network, likely because it was the cheaper option, Cowan says the quality of providers is pretty good. He adds that so far, he hasn’t heard anything for certain about other insurers adding to the lineup in the state for 2015’s open enrollment.
However, more broadly there may be some signs that competition is moving in consumers’, and the benefit brokers who serve them, favor. Earlier in May, Bloomberg News reported that UnitedHealthcare, the very same carrier used in Gruber’s simulation, is feeling out at least two new insurance markets. Their report also noted Virginia may see an uptick by at least one insurer and Indiana’s market may increase to eight insurers from four.
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